7/4/2015
By Tim Worstall
Greece has formalised its claim to reparations from Germanhy over the damages from World War II. They now say that the figure owed is €279 billion. That figure, made up of damages, forced loans and interest and inflation on those sums is of course a pretty sum. Enough to provide Greece with a get out of jail free card* from its current debt woes if it were ever paid. And of course the obvious point is that it simply isn’t going to get paid so it won’t act as a get out of jail free card. It’s entirely possible that there’s some moral right to some form of further compensation for the horrors and damages of those years and that occupation. But there’s no legal case to answer. So, there’s a vague possibility that it might act as some form of moral suasion upon German public opinion, and we have seen at least one German political party muse that perhaps part of the claim is valid in that sense. It also accords with a substantial amount of Greek public opinion which is where its real usefulness might lie. But it’s simply not going to be a major part of whatever does happen to the Greek debt and the current crisis.
The claim itself is as follows:
Greece’s deputy finance minister has said that Germany owes it nearly €279bn (£205bn) in reparations for the Nazi occupation of the country.
Greek governments and private citizens have pushed for war damages from Germany for decades but the Greek government has never officially quantified its reparation claims.
A parliamentary panel set up by Alexis Tsipras’s government started work last week, seeking to claim German debts, including war reparations, the repayment of a so-called occupation loan that Nazi Germany forced the Bank of Greece to make and the return of stolen archaeological treasures.
A little more detail:
This is the first time the Greek government quantified its claims, which included seeking war reparations and a so-called occupation loan that Nazi Germany forced the Bank of Greece to make. Athens also demanded that Berlin return its stolen archaeological treasures.
And further:
Speaking at parliamentary committee, Deputy Finance Minister Dimitris Mardas said Berlin owed Athens 278.7 billion euros, according to calculations by the country’s General Accounting Office. The occupation loan amounts to 10.3 billion euros.
For those interested in the detailed background of now the Nazis plundered the occupied countries in WWII this book, “Hitler’s Beneficiaries” by Goetz Aly, is probably the best source. A good review of it is here. It’s by no means all about Greece but Greece is used as a major example to show how national treasuries were looted. One tactic was to insist that the German troops were “protecting” the occupied countries and that therefore those countries should pay the costs of the troops stationed there to enforce the occupation. This sounds very odd indeed but it’s not actually all that out of line with what the general international law allowed at the time. The Nazis, of course, went further and started to insist that actually, those troops fighting on the Eastern Front were defending the occupied countries from the Soviets and that they should thus contribute to those costs as well. That was beyond what law at the time thought of as generally acceptable.
(In more detail, Article 49 of the Hague convention which was in force at the time: “Art. 49. If, in addition to the taxes mentioned in the above article, the occupant levies other money contributions in the occupied territory, this shall only be for the needs of the army or of the administration of the territory in question.”)
Little of this was specific to Greece though: they were general tactics used by the Nazis. Yes, of course they were foul, unfair, enforced by naked military power and so on. But that’s not quite the issue at hand. Which is, is there a legal requirement to pay reparations for them?
The answer to that is no, almost certainly not. The essential problem is that there is, a I’ve explained before a number of times, no Court of Equity in international law. While this will, in detail, horrify lawyers it’s a good enough description for us here. A court of equity is one where you can go and simply say “Look, it doesn’t matter what the law is, this is just infair. We demand justice.” And the court will then consider matters on the basis of whether it really is fair or not, and propose remedies based upon fairness, not the jot and tittle of what the law says. This simply doesn’t exist at the international level. We simply do not hold sovereign nations to such standards. If we did of course then the private sector bondholders would have a claim against Greece itself for the retrospective change in the collective action clauses that enabled the massive haircuts on the debt a few years back.
What we’re left with is simply what the law says. Which causes something of a problem for this Greek claim. Which comes in two parts: there’s reparations for damages during the war as the first part. Add interest and inflation and that makes up by far the largest part here. But those reparations have already, in international law, been settled. In 1960 and then again in 1990 at the time of German unification. This might not be fair: but as above the law here isn’t about fairness. So, while there might be a moral claim there isn’t that legal one. The second concerns the zero interest forced loan that the Bank of Greece had to make: that’s the one that makes up about €10 billion of the total claim. This walks into something of a trap. If it was a forced loan, one imposed simply by military might and occupation, then it’s already covered in those reparations. If it’s not a forced loan then the terms of it do stand: but it’s a zero interest loan. Meaning that the sum, after 70 years of inflation, is too small to do anything very much to make a difference. To claim interest (which is the same as trying to claim inflation in economic terms) it needs to be shown that the terms were forced: which means that it falls under the reparations which have already been solved.
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